Bandwidth Inc.

Previous wording

For the three months ended June 30, 2025 and 2024, total revenue was $180 million and $174 million, respectively, representing an increase of 4% between periods. For the three months ended June 30, 2025 and 2024, net loss was$5 million and net income was $4 million, respectively. For the six months ended June 30, 2025 and 2024, total revenue was$354 million and$345 million, respectively, representing an increase of 3% between periods. For the six months ended June 30, 2025 and 2024, net loss was$9 million and$5 million, respectively.

Current wording

For the three months ended September 30, 2025 and 2024, total revenue was $192 million and $194 million, respectively, representing a decrease of 1% between periods. For the three months ended September 30, 2025 and 2024, net loss was$1 millionand net income was less than $1 million, respectively. For the nine months ended September 30, 2025 and 2024, total revenue was$546 million and$539 million, respectively, representing an increase of 1% between periods. For the nine months ended September 30, 2025 and 2024, net loss was$10 million and$5 million, respectively.

Previous wording

The difference between the consideration used for the 2025 Repurchases and the carrying value of the 2026 Convertible Notes resulted in a gain of $1 million recorded within net gain on extinguishment of debt on our condensed consolidated statements of operations for the six months ended June 30, 2025.

Current wording

The difference between the consideration used for the 2025 Repurchases and the carrying value of the 2026 Convertible Notes resulted in a gain of $1 million recorded within net gain on extinguishment of debt on our condensed consolidated statements of operations for the nine months ended September 30, 2025.

Previous wording

We believe net retention rate is useful in evaluating our business. For the three months ended June 30, 2025 and 2024, the net retention rate was 112% and 111%, respectively.

Current wording

We believe net retention rate is useful in evaluating our business. For the three months ended September 30, 2025 and 2024, the net retention rate was 105% and 117%, respectively. The decline in our net retention rate was driven by lower political messaging revenue following the U.S. presidential election in November 2024.

Previous wording

For the three months ended June 30, 2025 and 2024, we generated 73% of our cloud communications revenue from reoccurring sources. For the six months ended June 30, 2025 and 2024, we generated 73% and 74%, respectively, of our cloud communications revenue from reoccurring sources. The large bulk of our remaining cloud communications revenue is generated from recurring monthly charges.

Current wording

For the three months ended September 30, 2025 and 2024, we generated 74% and 75%, respectively, of our cloud communications revenue from reoccurring sources. For the nine months ended September 30, 2025 and 2024, we generated 73% and 74%, respectively, of our cloud communications revenue from reoccurring sources. The large bulk of our remaining cloud communications revenue is generated from recurring monthly charges.

Previous wording

We recognize accounts receivable at the time the customer is invoiced. Additionally, we record a receivable for unbilled revenue if services have been delivered and are billable in subsequent periods. Unbilled revenue made up 55% of outstanding accounts receivable, net of allowances, as of June 30, 2025 and 2024.

Current wording

We recognize accounts receivable at the time the customer is invoiced. Additionally, we record a receivable for unbilled revenue if services have been delivered and are billable in subsequent periods. Unbilled revenue made up 58% and 55% of outstanding accounts receivable, net of allowances, as of September 30, 2025 and 2024, respectively.

Previous wording

For the three months ended June 30, 2025 and 2024, our effective tax rate was (2.8)% and (8.9)% respectively. The increase in the effective tax rate from 2024 to 2025 is primarily due to the valuation allowance in the U.S. and a decreased tax benefit from operating losses outside of the U.S., where tax benefits are not offset by a valuation allowance. For the six months ended June 30, 2025 and 2024, our effective tax rate was (0.8)% and 9.3% respectively. The unfavorable change in the effective tax rate associated with the increased tax expense as compared to the six months ended June 30, 2024, is primarily due to the valuation allowance in the U.S. and a decreased tax benefit from operating losses outside of the U.S., where tax benefits are not offset by a valuation allowance.

Current wording

Our effective tax rate was 64.8% and 228.7% for the three months ended September 30, 2025 and 2024, respectively, and 18.3% and 21.0% for the nine months ended September 30, 2025 and 2024, respectively. The decrease in the effective tax rate from 2024 to 2025 is primarily due to an increased operating loss in the U.S. This increased operating loss did not result in a corresponding increase to income tax benefit because the related deferred tax assets are subject to a valuation allowance. In periods in which we are in a pre-tax loss position, a decrease in the effective tax rate is considered unfavorable, as it indicates that a smaller portion of the pre-tax loss is recognized as an income tax benefit. The unfavorable change in the effective tax rate is partially offset by favorable U.S. income tax law changes under the One Big Beautiful Bill Act (“OBBBA”).

Previous wording

For the three months ended June 30, 2025, our cloud communications revenue increased by$7 million, or 6%, compared with the same period in 2024. Within cloud communications revenue, our Global Voice Plans revenue grew by 7% and was driven by higher voice traffic on our network. Our Programmable Messaging revenue decreased by 5% largely from lower political messaging activity following the U.S. presidential election in November 2024. Our Enterprise Voice revenue grew by 29%, reflecting strong momentum as our Maestro platform’s flexibility and vendor-agnostic UCaaS/CCaaS strategy continue to attract new customers.

Current wording

For the three months ended September 30, 2025, our cloud communications revenue increased by$3 million, or 2%, compared with the same period in 2024. Within cloud communications revenue, our Global Voice Plans revenue grew by 7% and was driven by higher voice traffic on our network. Our Programmable Messaging revenue decreased by 20% largely from lower political messaging activity following the U.S. presidential election in November 2024. Our Enterprise Voice revenue grew by 22%, reflecting strong momentum as our Maestro platform’s flexibility and vendor-agnostic UCaaS/CCaaS strategy continues to attract new customers.

Previous wording

For the three months ended June 30, 2025, our messaging surcharges revenue decreased by$1 million, or 2%, compared with the same period in 2024. This decline was primarily driven by lower political messaging activity following the U.S. presidential election in November 2024.

Current wording

For the three months ended September 30, 2025, our messaging surcharges revenue decreased by$5 million, or 9%, compared with the same period in 2024. This decline was primarily driven by lower political messaging activity following the U.S. presidential election in November 2024.

Previous wording

For the six months ended June 30, 2025, total cost of revenue decreased by$3 million compared with the same period in 2024, driven by lower messaging cost of revenue of$5 million from less political messaging following the 2024 U.S. presidential election. Thecombination of changes in total revenue and total cost of revenue yielded an increase in total gross profit of$13 million, or 10%, from the same period in 2024, driven byongoing efficiencies and improved unit economics as we successfully scale larger volumes of voice traffic on our network.

Current wording

For the three months ended September 30, 2025, total cost of revenue decreased by$3 million, compared with the same period in 2024, driven by lower messaging cost of revenue of$5 million from less political messaging following the 2024 U.S. presidential election. Thecombination of changes in total revenue and total cost of revenue yielded an increase in total gross profit of$1 million, or 1% from the same period in 2024, driven byongoing efficiencies and improved unit economics as we successfully scale larger volumes of voice traffic on our network.

Previous wording

For the three months ended June 30, 2025, our total gross margin percentage of 40% increased by 3%, compared with the same period in 2024, driven by lower pass-through messaging surcharges within the total revenue mix.

Current wording

For the three months ended September 30, 2025, our total gross margin percentage of 38% increased by less than 1%, compared with the same period in 2024, driven by lower pass-through messaging surcharges within the total revenue mix.

Previous wording

As a percentage of revenue, total operating expenses for thethree months ended June 30, 2025 and 2024 were 42% and 41%, respectively.

Current wording

As a percentage of revenue, total operating expenses for thethree months ended September 30, 2025 and 2024 were 40% and 38%, respectively.

Previous wording

For the three months ended June 30, 2025, research and development expenses increased by$4 million, or 13%, compared with the same period in 2024. This increase was primarily due to higher headcount expenses in support of our expanding research and development capabilities.

Current wording

For the three months ended September 30, 2025, research and development expenses increased by$3 million, or 9%, compared with the same period in 2024. Our continued investment in evolving our network infrastructure was the key driver behind this increase.

Previous wording

For the three months ended June 30, 2025, sales and marketing expenses decreased by $1 million, or 5%, compared with the same period in 2024, primarily due to lower headcount expenses from our resource optimization efforts.

Current wording

For the three months ended September 30, 2025, sales and marketing expenses decreased by $2 million, or 6%, compared with the same period in 2024, primarily due to lower headcount expenses from our resource optimization efforts.

Previous wording

For the six months ended June 30, 2025, general and administrative expenses increased by$3 million, or 10%, compared with the same period in 2024, driven by higher headcount expenses in connection with ongoing operational support needs.

Current wording

For the three months ended September 30, 2025, general and administrative expenses increased by$1 million, or 3%, compared with the same period in 2024, driven by higher non-headcount expenses in connection with maintaining and enhancing day-to-day business support activities.

Previous wording

For the three months ended June 30, 2025, we recognized an income tax expense of less than $1 million, an increase of less than $1 million compared with the same period in 2024. The resulting effective tax rate for the three months ended June 30, 2025 was (2.8)%, compared with (8.9)% in 2024.

Current wording

For the three months ended September 30, 2025, we recognized an income tax benefit of$2 million, an increase of$2 million compared with the same period in 2024. The resulting effective tax rate for the three months ended September 30, 2025 was 64.8%, compared with 228.7% in 2024. The increase in income tax benefit was primarily due to a$2 million benefit recognized as a result of favorable tax law changes enacted under OBBBA.

Previous wording

For the three months ended June 30, 2025, the effective tax rate of (2.8)% differed from the federal statutory rate of 21% in the U.S. primarily due to the valuation allowance recorded against our U.S. federal and state net deferred tax assets.

Current wording

For the three months ended September 30, 2025, the effective tax rate of 64.8% differed from the federal statutory rate of 21% in the U.S. primarily due to the valuation allowance recorded against our U.S. federal and state net deferred tax assets.

Previous wording

For the six months ended June 30, 2025, our cloud communications revenue increased by$12 million, or 5%, compared with the same period in 2024. Within cloud communications revenue, our Global Voice Plans revenue grew by 5% and was driven by higher voice traffic on our network. Our Programmable Messaging revenue decreased by 4% largely from reduced political messaging activity following the U.S. presidential election in November 2024. Our Enterprise Voice revenue grew by 27%, reflecting strong momentum as our Maestro platform’s flexibility and vendor-agnostic UCaaS/CCaaS strategy continue to attract new customers.

Current wording

For the nine months ended September 30, 2025, our cloud communications revenue increased by$15 million, or 4%, compared with the same period in 2024. Within cloud communications revenue, our Global Voice Plans revenue grew by 6% and was driven by higher voice traffic on our network. Our Programmable Messaging revenue decreased by 10% largely from reduced political messaging activity following the U.S. presidential election in November 2024. Our Enterprise Voice revenue grew by 25%, reflecting strong momentum as our Maestro platform’s flexibility and vendor-agnostic UCaaS/CCaaS strategy continue to attract new customers.

Previous wording

For the six months ended June 30, 2025, our messaging surcharges revenue decreased by$3 million, or 3%, compared with the same period in 2024. This decline was primarily driven by lower political messaging activity following the U.S. presidential election in November 2024.

Current wording

For the nine months ended September 30, 2025, our messaging surcharges revenue decreased by$8 million, or 5%, compared with the same period in 2024. This decline was primarily driven by lower political messaging activity following the U.S. presidential election in November 2024.

Previous wording

For the six months ended June 30, 2025, our average annual customer revenue was$0.2 million, which increased less than $0.1 million compared with the same period in 2024, as a result of our strategy to attract and retain larger customers who provide revenue scale and enhanced profitability.

Current wording

For the nine months ended September 30, 2025, our average annual customer revenue was$0.2 million, which increased less than $0.1 million compared with the same period in 2024, as a result of our strategy to attract and retain larger customers who provide revenue scale and enhanced profitability.

Previous wording

For the three months ended June 30, 2025, total cost of revenue decreased by less than $1 million, compared with the same period in 2024, driven by lower messaging cost of revenue of$2 million from less political messaging following the 2024 U.S. presidential election. Thecombination of changes in total revenue and total cost of revenue yielded an increase in total gross profit of$7 million, or 11% from the same period in 2024, driven byongoing efficiencies and improved unit economics as we successfully scale larger volumes of voice traffic on our network.

Current wording

For the nine months ended September 30, 2025, total cost of revenue decreased by$6 million compared with the same period in 2024, driven by lower messaging cost of revenue of$10 million from less political messaging following the 2024 U.S. presidential election. Thecombination of changes in total revenue and total cost of revenue yielded an increase in total gross profit of$14 million, or 7%, from the same period in 2024, driven byongoing efficiencies and improved unit economics as we successfully scale larger volumes of voice traffic on our network.

Previous wording

For the six months ended June 30, 2025, our total gross margin percentage of 40% increased by 2% compared with the same period in 2024, driven by lower pass-through messaging surcharges within the total revenue mix.

Current wording

For the nine months ended September 30, 2025, our total gross margin percentage of 40% increased by 2% compared with the same period in 2024, driven by lower pass-through messaging surcharges within the total revenue mix.

Previous wording

As a percentage of revenue, total operating expensesfor the six months ended June 30, 2025 and 2024 were 43%.

Current wording

As a percentage of revenue, total operating expensesfor the nine months ended September 30, 2025 and 2024 were 42% and 41%, respectively.

Previous wording

For the six months ended June 30, 2025, research and development expenses increased by$5 million, or 9%, compared with the same period in 2024. This increase was primarily due to higher headcount expenses in support of our expanding research and development capabilities.

Current wording

For the nine months ended September 30, 2025, research and development expenses increased by$8 million, or 9%, compared with the same period in 2024. Our continued investment in evolving our network infrastructure was the key driver behind this increase.

Previous wording

For the six months ended June 30, 2025, sales and marketing expenses decreased by $4 million, or 7%, compared with the same period in 2024, primarily due to lower headcount expenses from our resource optimization efforts.

Current wording

For the nine months ended September 30, 2025, sales and marketing expenses decreased by $6 million, or 7%, compared with the same period in 2024, primarily due to lower headcount expenses from our resource optimization efforts.

Previous wording

For the three months ended June 30, 2025, general and administrative expenses increased by$2 million, or 13%, compared with the same period in 2024, driven by higher headcount expenses in connection with ongoing operational support needs.

Current wording

For the nine months ended September 30, 2025, general and administrative expenses increased by$4 million, or 8%, compared with the same period in 2024, driven by higher headcount expenses in connection with ongoing operational support needs.

Previous wording

For the six months ended June 30, 2025, interest expense, net of interest income increased by$1 million, compared with the same period in 2024, primarily from less interest income resulting from cash being utilized to fund the 2024 Repurchases in May 2024 and the 2025 Repurchases in February 2025.

Current wording

For the nine months ended September 30, 2025, interest expense, net of interest income, increased by less than $1 million, compared with the same period in 2024, primarily from decreased interest income resulting from cash used to fund the 2024 Repurchases and 2025 Repurchases.

Previous wording

For the six months ended June 30, 2025, we recognized an income tax expense of less than $1 million, an increase of less than $1 million, compared with the same period in 2024. The resulting effective tax rate for thesix months ended June 30, 2025 was (0.8)%, compared with 9.3% in 2024.

Current wording

For the nine months ended September 30, 2025, we recognized an income tax benefit of$2 million, an increase of $1 million, compared with the same period in 2024. The resulting effective tax rate for thenine months ended September 30, 2025 was 18.3%, compared with 21.0% in 2024. The increase in income tax benefit was primarily due to a$2 million benefit recognized as a result of the favorable tax law changes enacted under OBBBA.

Previous wording

For the six months ended June 30, 2025, the effective tax rate of (0.8)% differed from the federal statutory rate of 21% in the U.S. primarily due to the valuation allowance recorded against our U.S. federal and state net deferred tax assets.

Current wording

For the nine months ended September 30, 2025, the effective tax rate of 18.3% differed from the federal statutory rate of 21% in the U.S. primarily due to the valuation allowance recorded against our U.S. federal and state net deferred tax assets.

Previous wording

Most of the permanent tax adjustments within our effective tax rate are offset by a valuation allowance. These adjustments include state taxes, federal research tax credits under Section 41 of the Code, equity compensation in the U.S. and other non-deductible expenditures in the U.S. Excluding the impact of the valuation allowance, we realized an estimated state effective tax rateof 4.3% for thesix months ended June 30, 2025. In addition, exclusive of the valuation allowance, we continue to generate income tax benefits in the current period related to income tax credits recognized for qualified research activities in the U.S. The applicable federal tax laws and regulations define qualified research activities as research and development activities conducted in the U.S. that involve a process of experimentation designed to discover new information intended to develop a new or improved business component. Absent the valuation allowance, equity compensation also impacts the effective tax rate to the extent the income tax deduction exceeds or is below the related book expense, as required under ASC 718-740-35-2. Other U.S. non-deductible expenses that are offset by the valuation allowance consist primarily of non-deductible executive compensation under Section 162(m) of the Code.

Current wording

Most of the permanent tax adjustments within our effective tax rate are offset by a valuation allowance. These adjustments include state taxes, federal research tax credits under Section 41 of the Code, equity compensation in the U.S. and other non-deductible expenditures in the U.S. Excluding the impact of the valuation allowance, we realized an estimated state effective tax rateof 4.3% for thenine months ended September 30, 2025. In addition, exclusive of the valuation allowance, we continue to generate income tax benefits in the current period related to income tax credits recognized for qualified research activities in the U.S. The applicable federal tax laws and regulations define qualified research activities as research and development activities conducted in the U.S. that involve a process of experimentation designed to discover new information intended to develop a new or improved business component. Absent the valuation allowance, equity compensation also impacts the effective tax rate to the extent the income tax deduction exceeds or is below the related book expense, as required under ASC 718-740-35-2. Other U.S. non-deductible expenses that are offset by the valuation allowance consist primarily of non-deductible executive compensation under Section 162(m) of the Code.

Previous wording

Our liquidity is provided by our cash flow from operations less expenditures for capital equipment, and supplemented by financing activities from time to time. Our cash flow from operations is driven by monthly payments from customers for communication services consumed during the period. Our primary uses of cash include operating costs, such as fees paid to other network service providers, network operations costs, personnel costs and facility expenses, as well as the purchase of property, plant and equipment to support growth on our communications platform. As of June 30, 2025, we had cash and cash equivalents of $60 million and marketable securities of $8 million.

Current wording

Our liquidity is provided by our cash flow from operations less expenditures for capital equipment, and supplemented by financing activities from time to time. Our cash flow from operations is driven by monthly payments from customers for communication services consumed during the period. Our primary uses of cash include operating costs, such as fees paid to other network service providers, network operations costs, personnel costs and facility expenses, as well as the purchase of property, plant and equipment to support growth on our communications platform. As of September 30, 2025, we had cash and cash equivalents of $73 million and marketable securities of $7 million.

Previous wording

In August 2023, we entered into a credit agreement (as amended to date, the “Credit Agreement”), among the Company, as borrower, the lenders from time to time party thereto, and Bank of America, N.A., as administrative agent, swingline lender and letters of credit issuer, which provides for a $150.0 million revolving credit facility (the “Credit Facility”). As of June 30, 2025, we had no outstanding borrowings under the Credit Facility and the available borrowing capacity was $150 million. See Note 8, “Debt,” to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information regarding the Credit Agreement, including a summary of the current terms of the Credit Facility.

Current wording

In August 2023, we entered into a credit agreement (as amended to date, the “Credit Agreement”), among the Company, as borrower, the lenders from time to time party thereto, and Bank of America, N.A., as administrative agent, swingline lender and letters of credit issuer, which provides for a $150 million revolving credit facility (the “Credit Facility”). As of September 30, 2025, we had no outstanding borrowings under the Credit Facility and the available borrowing capacity was $150 million. See Note 8, “Debt,” to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information regarding the Credit Agreement, including a summary of the current terms of the Credit Facility.

Previous wording

Our principal future commitments consist of (i) an aggregate of $258 million in Convertible Notes, (ii) $462 million infuture minimum rent payments for ourcurrent office space, including a $456 millionnon-cancelable lease for our new corporate headquarters, which commenced in the third quarter of 2023 and which will continue for an initial twenty (20) year term, and (iii) $18 million in non-cancelable purchase obligations and future minimum payments under contracts to various service providers. For additional information on these future contractual obligations, see Note 8,“Debt,” and Note 12,“Commitments and Contingencies,” to thecondensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

Our principal future commitments consist of (i) an aggregate of $258 million in Convertible Notes, (ii) $456 million infuture minimum rent payments for ourcurrent office space, including a $450 millionnon-cancelable lease for our new corporate headquarters, which commenced in the third quarter of 2023 and which will continue for an initial twenty (20) year term, and (iii) $19 million in non-cancelable purchase obligations and future minimum payments under contracts to various service providers. For additional information on these future contractual obligations, see Note 8,“Debt,” and Note 12,“Commitments and Contingencies,” to thecondensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

For the six months ended June 30, 2025, net cash provided by operating activities was$29 million and was generated by our aggregate results of $42 million during the period, net of (1) non-cash items comprising depreciation and amortization, non-cash reduction to the right-of-use asset, amortization of debt discount and issuance costs, stock-based compensation, deferred taxes and other, net gain on extinguishment of debt and (2) a$13 million cash outflow from lower operating liabilities and higher operating assets. Within operating liabilities, the net cash used as a result oflower accounts payable of $8 million during the six months ended June 30, 2025, was primarily driven by the timing of payments. Within operating assets, the net cash used as a result of higher accounts receivable of$2 million during thesix months ended June 30, 2025, was driven by higher unbilled receivables balances arising from higher usage amounts in the last month of the quarter ended June 30, 2025.

Current wording

For the nine months ended September 30, 2025, net cash provided by operating activities was$51 million and was generated by our aggregate results of $70 million during the period, net of (1) non-cash items comprising depreciation and amortization, non-cash reduction to the right-of-use asset, amortization of debt discount and issuance costs, stock-based compensation, deferred taxes and other, net gain on extinguishment of debt and (2) a$19 million cash outflow from lower operating liabilities and higher operating assets. Within operating liabilities, the net cash used as a result of lower accrued expenses and other liabilities of $13 million during the nine months ended September 30, 2025, was primarily driven by the timing of payments. Within operating assets, the net cash used as a result of higher accounts receivable of$6 million during thenine months ended September 30, 2025, was driven by higher unbilled receivables balances arising from higher usage amounts in the last month of the quarter ended September 30, 2025.

Previous wording

For the six months ended June 30, 2025 net cash used in investing activities was $22 million. Cash used in investing activities was primarily driven by (1) cash used for the purchase of property, plant and equipment of$11 million and cash used for capitalized software development costs of$5 million, driven by investments in the communications platform, and (2) cash used for purchases of marketable securities, net of maturities, of$6 million from diversifying into higher yielding investments.

Current wording

For the nine months ended September 30, 2025 net cash used in investing activities was $30 million. Cash used in investing activities was primarily driven by (1) cash used for the purchase of property, plant and equipment of$17 million and cash used for capitalized software development costs of$8 million, driven by investments in the communications platform, and (2) cash used for purchases of marketable securities, net of maturities, of$5 million from diversifying into higher yielding investments.

Previous wording

For the six months ended June 30, 2025, net cash used in financing activities was$29 million, consisting primarily of$26 million of cash used to complete the 2025 Repurchases.

Current wording

For the nine months ended September 30, 2025, net cash used in financing activities was$29 million, consisting primarily of$26 million of cash used to complete the 2025 Repurchases.

Previous wording

(1) Calculated by dividing Non-GAAP gross profit by cloud communications revenue of $136 million and $269 million for the three and six months ended June 30, 2025, respectively, and $128 million and $257 million for the three and six months ended June 30, 2024, respectively.

Current wording

(1) Calculated by dividing Non-GAAP gross profit by cloud communications revenue of $142 million and $411 million for the three and nine months ended September 30, 2025, respectively, and $139 million and $396 million for the three and nine months ended September 30, 2024, respectively.

Previous wording

(1)Non-recurring items not indicative of ongoing operations and other include (i) $0.2 million of losses on disposals of property, plant and equipment during the three and six months ended June 30, 2025, (ii) $0.1 million of losses on sale of business during the three and six months ended June 30, 2025, (iii) $0.5 million of nonrecurring litigation expense during the six months ended June 30, 2025, and (iv) less than $0.1 million and $0.1 million of losses on disposals of property, plant and equipment during the three and six months ended June 30, 2024, respectively.

Current wording

(1)Non-recurring items not indicative of ongoing operations and other include (i) $1.2 million of foreign exchange charges primarily related to balance sheet revaluations during the three and nine months ended September 30, 2025, and less than $0.1 million and $0.2 million of losses on disposals of property, plant and equipment during the three and nine months ended September 30, 2025, respectively, (ii) $0.5 million of nonrecurring litigation expense and $0.1 million of losses on sale of business during the nine months ended September 30, 2025, and (iii) $1.0 million gain on the sale of an intangible asset during the three and nine months ended September 30, 2024, and less than $0.1 million and $0.2 million of losses on disposals of property, plant and equipment during the three and nine months ended September 30, 2024, respectively.

Previous wording

(2) The estimated tax-effect of adjustments is determined by recalculating the tax provision on a Non-GAAP basis. The Non-GAAP effective income tax rate was 13.9% and 15.0% for the six months ended June 30, 2025 and 2024, respectively. For the six months ended June 30, 2025, the Non-GAAP effective income tax rate differed from the federal statutory tax rate of 21% in the U.S. primarily due to the research and development tax credits generated in 2025. We analyze the Non-GAAP valuation allowance position on a quarterly basis. As of June 30, 2025, we have no valuation allowance against our deferred tax assets for Non-GAAP purposes.

Current wording

(2) The estimated tax-effect of adjustments is determined by recalculating the tax provision on a Non-GAAP basis. The Non-GAAP effective income tax rate was 17.2% and 15.5% for the nine months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025, the Non-GAAP effective income tax rate differed from the federal statutory tax rate of 21% in the U.S. primarily due to the research and development tax credits generated in 2025. We analyze the Non-GAAP valuation allowance position on a quarterly basis. As of September 30, 2025, we have no valuation allowance against our deferred tax assets for Non-GAAP purposes.

Previous wording

(1)Non-recurring items not indicative of ongoing operations and other include (i) $0.2 million of losses on disposals of property, plant and equipment during the three and six months ended June 30, 2025, (ii) $0.1 million of losses on sale of business during the three and six months ended June 30, 2025, (iii) $0.5 million of nonrecurring litigation expense during the six months ended June 30, 2025, and (iv) less than $0.1 million and $0.1 million of losses on disposals of property, plant and equipment during the three and six months ended June 30, 2024, respectively.

Current wording

(1)Non-recurring items not indicative of ongoing operations and other include (i) $1.2 million of foreign exchange charges primarily related to balance sheet revaluations during the three and nine months ended September 30, 2025, and less than $0.1 million and $0.2 million of losses on disposals of property, plant and equipment during the three and nine months ended September 30, 2025, respectively, (ii) $0.5 million of nonrecurring litigation expense and $0.1 million of losses on sale of business during the nine months ended September 30, 2025, and (iii) $1.0 million gain on the sale of an intangible asset during the three and nine months ended September 30, 2024, and less than $0.1 million and $0.2 million of losses on disposals of property, plant and equipment during the three and nine months ended September 30, 2024, respectively.